Coronavirus - important information from the Tax Administration

Expenses

Cash purchases

If you choose to pay the enterprise's expenses with cash (bills or coins), this is called a cash purchase.

You cannot deduct expenses or input VAT you pay in cash if the cost is NOK 10,000 or more. In order to deduct the expenses for your enterprise, you must pay via a bank (using a card or an invoice). This rule allows the tax authorities to exclude expenses in the accounts when there are cash purchases over NOK 10,000. If you pay for the enterprise's purchases in more than one instalment, the above-mentioned NOK 10,000 limit applies to the purchase in entirety (all instalments). The purpose of this rule is to make it harder to commit fraud.

Deductions

You can deduct expenses related to running your business in your accounts.

The enterprise's expenses can be divided in two main categories:

  • Expenditures are expenses that entail a corresponding cost.
    Examples: postage, office equipment, raw material, goods for resale etc.
  • Computed cost can be depreciations where the computed cost is not directly related to the cost.
    Example: You buy a machine for NOK 100,000. The machine must be depreciated (the expense is divided over several year in the accounts). The cost when you buy the machine is NOK 100,000, but you can only deduct 30 percent in the account, i.e. NOK 30,000, for the first year.

You can also use the deduction tool for sole proprietorships.

Depreciations

You must depreciate fixed assets that the enterprise expects to use for more than 3 years, and that have an original cost of NOK 15,000 not including VAT. That means that you cannot deduct the expense in it's entirety in the year it was acquired, you must divide it between several years.

When it comes to tax, the enterprise must use the balance method, which entails a high rate of depreciation (cost) during the first year and gradually decreasing depreciation during the subsequent years.

You can see the maximum rates for depreciation of the different types of fixed assets in section 6-10 of the Taxation Act. Enterprises that depreciate their fixed assets must submit the form "Avskrivning" RF-1084 (Depreciation – in Norwegian only) as an attachment to their tax return.

Temporary differences

The enterprise can choose another form of depreciation in their financial accounts than what must be used in the tax accounts. If they do so, there might be different amounts of depreciation and asset value in the financial accounts and the tax accounts. These temporary differences represent wealth or debt in the accounts, while the change in temporary differences from one year to the next affect the assessed tax. Enterprises that use different methods of depreciation in their financial accounts and tax accounts must submit the form "Forskjeller mellom regnskapsmessige og skattemessige verdier" (RF-1217) (Differences between accounting and tax value – in Norwegian only) as an attachment to their tax returns.